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Adam Hugh Warby:
Independent Non-Executive Chair of the Board: Well, good morning, everyone. I was sometimes used to the voice of God announcement when you get up on the stage, but it was just quiet whispers from Nick. But it's good to be back here. My first time to be with you all was at the fiscal year '24 presentation. Well I was still relatively new, 4 or 5 months have passed since then. So I'm delighted to be here to share some reflections over the last 4 or 5 months, spent time, as you expect, with colleagues, partners and shareholders listening to the various perspectives of you all. And we've also spent time as a Board looking at Ocado Group strategy. So it's really with that, that I want to spend just a brief moment ahead of the presentation sharing some of those into -- I was in charge of my own clicking you see, Nick. I've done this before. We -- I'll let you do it, if you want to do it. Well, look, it's no surprise, and you've seen it in the announcement. Our first priority is to become cash flow positive in FY '26. And you'll hear more details of that, obviously, from both Stephen and Tim. And that has to be through keen and sharp execution, lean operations and disciplined capital allocation. We've come to the end of a significant R&D wave. So more discipline, more focus on that is obviously a key priority. No surprise. We have a small number of very important partners globally and the success of those partners is key. So focus on helping them with their sort of end-to-end e-commerce and logistics strategies is a priority, and we continue to be very focused on that and bringing new capabilities to the table there. As recently, some of them are reflected with us. They are growing new muscles in this e-commerce world as they learn, as e-commerce becomes the dominant growth strategy for retail, they're learning how to run their business. And our priority is obviously to help them be successful and to make the most out of the Ocado technology. And then the third piece, which you'll hear more about from Tim later in the presentation is evolving our commercial strategy. And that is 7 years on from when we launched this business. The market has changed, our offering has changed. And I think how we're enhancing that is a key part that we want to share with you. Tim will take you through those priorities later on. Another aspect that you've seen in the RNS is exclusivity terms. We -- obviously, the world moves on from when we announce those. And in a world now where those exclusivity terms are beginning to roll off, we think it's appropriate to change those, and Tim will describe why that is. But I think in the context of -- I think it's a number of you as shareholders have quizzed us on this and are obviously interested, but it's appropriate in this world where we are now as we roll off to think of the tailwinds for new partners to be more in the 12-month range than they have been historically. So an important milestones for us as we move forward there. So I think in summary, it's a simple message, I think, from our results today that the priorities are clear, laser focus on cash flow positive in FY '26, driving success with our partners and evolving the commercial success -- commercial strategy for a world where there is a lot of opportunity in the marketplace, and we remain excited about that. So with those just introductory scene setting remarks, I will pass to Stephen and pass the clicker test.
Stephen Wayne Daintith: Good morning, everybody. Thanks for joining us this morning for the half year results. Okay. So I think it's been solid progress during the first half. Revenue growth. Let's start with revenue, up 13%. That's growing across both Technology Solutions and Logistics, healthy growth there of 15% and 12%, respectively. I'm going to take you through the individual businesses in a moment. So I'll just give you the headlines now. Underlying cash flow, GBP 93 million improvement of underlying cash flow half year over half year. You'll see the drivers of that. You're going to see revenue growth. You're going to see cash flow improvement driven by lower CapEx, fees from partners and cost control as well, just reinforcing those words that Adam used, good cost discipline around technology spend and around group support spend as well. That's corporate overheads. Group adjusted EBITDA, plus GBP 40 million, GBP 92 million. Technology Solutions performing particularly strongly there now reporting a GBP 73 million EBITDA and a very healthy mid-20% EBITDA margin. Top right -- sorry, on top right, EBITDA liquidity. So as of now, at the end of June, our liquidity was just approaching GBP 1.2 billion. This reflects the extension of the GBP 300 million raise that we did during the early part of this year. It also reflects the drawdown on the letter of credit from Kroger that was carried out as well. So GBP 866 million of cash today at the end of June, an undrawn and accessible GBP 300 million revolving credit facility gets you to that GBP 1,166 million. And that allows you -- I've got a chart that shows a little later to address our maturities, our debt maturities from '25, '26 and '27 from the combination of that strong liquidity and materially improving cash flows over those 2 years. Really important point. I was going to say next slide, please there. Well that's me, isn't it? Okay. So here's the P&L account from revenue down to EBT. Revenue I've gone through those numbers. EBITDA, I've gone through those numbers. Note the exclusion of Ocado Retail from these numbers. We're deconsolidating Ocado Retail. They've taken out completely out of these numbers. All that you'll see on the balance sheet is a single line. It's within this line here, share of results and JVs and associates. There's a GBP 9 million -- I believe it's a GBP 9 million loss in there for Ocado Retail in respect of that number. And you're also going to see on the balance sheet, the GBP 750 million valuation that we've put around our 50% of Ocado Retail. Share of JVs talks about the key drivers there. Depreciation and amortization slightly down. There are certain technology projects that are now fully amortized, so there's a nonrepeat of that depreciation cost. Finance income is slightly down. There have been some base rate reductions that have impacted the amount of interest that we earn on our cash balances. At the same time, our finance costs have gone up considerably with the higher coupons that we're seeing on our debt that we've raised over the course of the last 12, 18 months. In the appendix is a pretty useful analysis, in fact, of our interest costs and how they move from year-to-year. So I'm sure you want to have a look at that at some point. Other finance gains and losses. Last year, we benefited from a revaluation of our investment in [ WAVE ], if you recall, there was a GBP 9 million credit to the profit and loss account, and that gets you to our numbers. Adjusting items, a lot going on in here, and let me take you to the next slide to go through those. So ORL deconsolidation. So you'll have seen that we valued our 50% of Ocado Retail at GBP 750 million. I should stress, it's a prudent accounting valuation. We expect that in a real-world transaction, the value of Ocado Retail is worth a lot more than that implied number from that GBP 750 million. We've employed a big firm to derive that valuation and the Audit Committee and the Board have approved that valuation as well. And it's been audited by Deloitte. So just to frame that in perspective. That GBP 750 million valuation, when you then add back the net liabilities that are on our balance sheet today that are being deconsolidated as a consequence of the Ocado Retail deconsolidation, that gets you to that gain of GBP 783 million. Jones Food deconsolidation that went into administration 3 or 4 months ago, that is the write-off of the net assets that we were consolidating in our numbers on our balance sheet. We, in fact, lose all the revenues and the costs and the balance sheet items from nonconsolidation of Jones Food as it's now administration as a discontinuing business. Other adjusting items, some small items that are in there, HR and finance system transformation that's in our logistics business and pretty much immaterial items going through the rest of the pack there. Gain last year on sale of assets was the Dagenham and Coventry spoke sales that generated that GBP 12 million positive number. Okay. Technology Solutions. So driver of the P&L account, average number of live modules, up 9% from 112 to 122. That's the annualization of sites that have gone live in the prior year, but it's also drawdowns on existing sites, driving that revenue number. Recurring revenue for the half now at GBP 223 million, growing by 10%. Nonrecurring revenue, that includes in there the GBP 16 million from Morrisons, which was the one-off benefit due to the cancellation fees as they moved out of Erith. Direct operating costs, the contribution margin continues to improve, now at 74% from 71%. We expect to get this number even higher as we get better and better at reducing the costs of operating our facilities on behalf of our clients in the U.K. and overseas. Technology costs starting to decline, GBP 3 million decline in technology costs. Support costs, GBP 1 million decline. But calling out there that last year, of course, we benefited from the -- by GBP 5 million from the Mastercard and Visa settlement that's nonrepeated. So in real terms, we'd regard this as a GBP 6 million saving year-on-year. That's how the numbers all come together. There's a GBP 73 million and that EBITDA margin of 26%. If you were to take out the Morrisons fees that I referenced, bottom right there, 22% EBITDA margin. So still an extremely healthy margin, notwithstanding the exclusion of the Morrisons' fees, which is in effect just an acceleration of fees that we would have earned in any event over the next 12 months or so. Recurring revenue. I've gone through these numbers, a growing trajectory. This is the key number that you should be focused on, get the live modules up. Our partners are growing their utilization levels. They're growing their volumes. We call out in our results, I think each is per week, about 24% year-over-year. So growing volumes, growing into their design capacity, that will ultimately drive greater utilization and drawdown of modules. Recurring revenue per module continuing to increase, a little bit of a more modest increase this year, but still growing. And then the recurring revenue is just a consequence of the previous 2 numbers. So you see the profile that we're on. Okay. Cost discipline and focus across all areas. So here's our direct operating costs like we mentioned, we expect to get this down to 25%. You can see the trajectory that we're on. Here, we're calling out what we think 25%, we've guided that number already, GBP 250 million. And remember the aggregate of these 2 numbers, GBP 250 million and GBP 170 million, which is 420 million that we're calling out for '25. And when it comes to this, let me give you some guidance about the years ahead. Carry on. Ocado Logistics. Ocado Logistics, as a reminder, carries out the distribution and fulfillment services for Ocado Retail and Morrisons. It's a cost pass-through business. So pretty much all of its costs are recharged to either Ocado Retail or Morrisons depending on their own particular volumes. And then we charge a 4% management fee on top, and that's what makes it to the EBITDA number is that 4% management fee. Volumes are up 10%. They drive the revenue up 12%, orders per week up 11%. Again, this is across Ocado Retail most largely. UPH, really important number. UPH, units per hour, our measure of productivity. The higher this goes, the lower labor costs come down, labor unit costs come down. Really key driver for us and a key part of the Ocado narrative. At Luton now, we reported 287 UPH at Luton. We believe we can get in excess of 300, and there's a lot of good indications that we're well on the way to do that. Drop per van per week, slightly higher, deliveries per van per week, slightly higher as well. So logistics, a consistent reliable generator of EBITDA and cash flow, GBP 19 million has set us up nicely for the second half and the full year and watch this space on that one. U.K. partners, that's the productivity point that I just mentioned. There's the 287. We expect to get 300 UPH as I just referenced. Deliveries, again, continue to improve, addressing the Hatfield headwinds that we had in the prior year. Ocado Retail. Really strong set of numbers from Ocado Retail. These are nonconsolidated numbers, but we're sharing these numbers with you because it's important that we give you as much disclosure on Ocado Retail in a world of deconsolidation as we did in a world of consolidation. So you should expect more of the same. 16% revenue growth, really healthy revenue growth. Customer numbers are up, order numbers are up, frequency is improving, some strong dynamics taking place in the Ocado Retail business. I'm going to go through those drivers on the next slide. CFC costs matching the volume growth, growing by 7%, in fact, lower than volume growth, so some good efficiencies there. Service delivery costs are up 24% year-on-year. The impact coming through of the national living wage increases, but also minimum wage as well. So those 2 current drivers, those 2 dynamics are fundamental to that 24% growth in service delivery costs that are impacting Ocado Retail. Gross margin, I should say, is that we continue to pass price on to the consumer to win business. That drives the growing customer numbers. We think that's the more important dynamic for us is that growth. We can always get EBITDA margin when we want it. But the growth is important to get those customers in, good, loyal customers for the long term. That's our priority. Marketing costs pretty down, flat support costs. We have been carrying some dual costs over the last 12 months, in respect of the migration to OSP and being on the old platform at the same time. Those costs will wash out as we get into '26 and '27. You should expect savings in '26 on this number versus '25. I've checked that, by the way, with the Ocado Retail Finance team and they're comfortable with that. This is an elevated level of support costs for Ocado Retail. Fees in relation to us, EBITDA of GBP 33 million. Once you strip out the Hatfield fees, we're an underlying EBITDA margin of 3.3%, improving year-over-year. Here's some dynamics that I mentioned, revenue up 16%, orders up 15%, active customers up 13%, basket value up 0.7%. We've invested in price. You can see that we've increased the average selling price by just 1.4% and the 3.1% is the U.K. grocery market number. So well below inflation that we're seeing nationally. All good stuff. Ocado Retail KPIs, again, good dynamics. Eaches per basket pretty stable at around 44. Customer numbers growing. You can see the trajectory where we were just in 4 years ago, 688,000 and now well over 1 million. And then capacity utilization, an important point. An important point for us, as they're approaching capacity utilization, we might reasonably expect more CFC orders. At the same time, though, we are finding ways through our automation, through our reimagined kit to drive improved productivity in our modules. You'll see that in Kroger. I think in Detroit, we call out a 50% improvement in capacity available with limited, if not 0 CapEx to get to that outcome. A really good result. Great for our partners, great for us. We've got a stronger sales proposition as a consequence. Ocado Retail now deconsolidated. These are the numbers for Ocado Retail adjusted EBITDA at 100% of GBP 33 million. There's your operating loss before adjusting items of GBP 18 million. Our 50% share is the [ 9 ] number that we saw a little earlier, okay? We do have, for those of you that are keen to attend an accounting seminar being held this afternoon on what the balance sheet looks like in some detail and the P&L account. So for those of you that wish to attend, tune in -- at what time is it, Jess? 4:30 this afternoon. Great accounting seminar. Here's the gain that I mentioned a little earlier, the GBP 783 million from that revaluation. Important point here, the deconsolidation has absolutely no change to our 50% economic ownership. Nothing changes in the contractually in the relationship, nothing changes in the terms. This is simply an accounting treatment. And it was built into the original agreement back in 2019. So nothing should be read into it other than that. Okay. Cash flow. Turn cash flow positive in '26, full year cash flow positive in '27. Key goal for us, I think for the Board, for the executive team, but actually for the company as well. We've started now the conversations in the right parts of the company. Clearly, something like this you want to keep to a relatively small group, but it's now become a company-wide exercise to ensure that we deliver those -- that goal. Really important to show cost discipline, come a long way of Ocado. We've invested a lot of capital. We're now at that stage where it's about turning that capital, that investment into profits and cash flows. That's where we are, very focused on that. I think it's going to be healthy for the business actually. We've grown a lot. When I look at corporate overheads and how they've pretty much doubled over the last 6 or 7 years, largely for good reason, but I think there are opportunities there to trim and have a more of a simple business and a leaner organization. So I think it will be a good thing. Cash received from contract liabilities, that's the upfront fees that we get from people like Ocado and Lotte and so on, which routinely appears in our cash flow. Working capital movements is slight negative this year. We expect that to reverse at the full year. We typically have this sort of trend, first half outflow, second half inflow. Interest paid growing considerably, again, as a consequence of our more expensive debt. Interest received lower, going back to that base rate comment that I made earlier. We've got 1 or 2 other noncash items that are in there. Capital expenditure down, repayment of lease liabilities is the same, getting us to that underlying cash flow of GBP 108 million, GBP 93 million improvement year-over-year. We reported net cash inflows, however, there's your underlying outflow. The penultimate GBP 50 million from AutoStore, GBP 8 million to come in the second half, and that will include the full GBP 200 million plus interest that AutoStore have paid us as a consequence of the court case that they originally started back in October 2020. Organizational restructuring, that's the GBP 12 million that I referenced earlier on in exceptional adjusting items, and that gets you to your reported cash inflow, in fact, of GBP 13 million. Okay. Outlook. Just a reinforcement of the cash flow positive message from a little earlier, very much on track for that commitment remains. And the bottom left are the drivers of the cash flow improvement year-over-year that you've just seen. So again, you'll be familiar with these numbers. Here's the GBP 420 million that we're looking at. That's the GBP 40 million of savings that we referenced. Remember, the GBP 12 million of restructuring costs, that's the GBP 40 million of that saving. You could ask, well, how come it such a small restructuring cost of GBP 12 million to deliver GBP 40 million. A lot of our spend, particularly in technology areas, which have trimmed down is a contractor base, which are clearly less expensive employees when it comes to terminating their services. Contribution growing, I'm sure you'll be getting out your rulers and measuring how large these charts are. They're not drawn to any particular scale, just to emphasize the broad ambition that's in those numbers over the next couple of years. These 2 areas, I think, in particularly in support costs are going to be particularly important when I think about technology spend and support cost spend to help us secure that cash flow priority. Ocado Retail is now self-funding. It has cash on the balance sheet, and it is able to generate cash and potentially even fund future CFCs when they order those over the next 2 or 3 years, we hope. Stable cash generation for Ocado Logistics, that's reliable. And there are some new cash flows coming in from OIA, reasonably modest numbers at this stage. The business has won one contract with McKesson. We've just announced a second contract win as well in today's results. Still early days, very, very healthy pipeline, a competitive space, but at this stage, just modest cash flows from OIA. Managing our debt maturities in an orderly way. We'll take you through here where we were at the end of '24, first half '25 and then where we are today. The key point here to make is that with the cash that we have and with these maturities, we can address these maturities, these 3 maturities out of our existing liquidity and improving cash flows. So no need to access the debt markets over the next 2.5 years to address the maturities. There may be other reasons why you choose to access the debt markets. But in respect of these maturities, we can manage out of existing liquidity and improving cash flows. That's really all I want to say on this slide. Guidance, maintaining guidance, no changes, well on track. There you go, strong performance, cost discipline, cash flows, debt profile on track. Core priority, turn cash flow positive next year, full year '27 cash flow positive. With that, I'm going to hand over to Tim. Thank you.
Timothy Steiner: Thanks, Stephen. He gets all the good stuff. Good morning, everybody. Okay. So we've had a number of milestones in the first half. We've gone live in Korea, one of the most developed markets in e-com globally and also one of the least in Saudi Arabia, demonstrating the breadth and application of our solutions. We've widened the use cases for Ocado CFCs with shopper orders coming in from marketplaces in at least one of our clients starting to be fulfilled through OSP. We're taking our international CFCs beyond their design capacity with Detroit going to 50% larger than its original design. We announced the upgrade in the Bon Preu relationship, evolving from store pick through dark stores, manual warehouse and now committed to building an automated warehouse. We've transitioned the whole of the U.K. shoppers from the legacy platform onto all shopping on OSP. Hopefully, all of you shoppers there will have seen that upgrade. And obviously, one of our newer partners, Coles, have made very good progress, continue to report multiple positive outcomes as they continue to ramp their new business in their 2 new CFCs. Reminder of what we do differently to the traditional way. The -- at a headline level, our core cost comparisons are we're removing costs versus the traditional method of utilizing stores. We consolidate multiple processes into our highly automated CFCs, our centralized fulfillment, and it takes out a material amount of the cost as illustrated here, probably about 2/3 of the cost versus doing this in a traditional supply chain. By removing these costs, we're able to power people's online businesses to be more profitable than they would be in a store environment. Let's talk a little bit about space efficiency, illustration here of our space efficiency. These are the sales capacity per square foot of our site in Luton when we went live was GBP 350 per square meter, sorry. If we rebuild Luton today, and obviously, we are doing designs both for growth in the U.K. and internationally, we can now take that up to GBP 663 per square meter, which we think is a significant multiple of what that is in a traditional grocery store. So attractive space utilization. And obviously, we're seeing that in 2 extra formats, one being Detroit, as I mentioned, where we can take the original footprint and get more than -- get up to 50% more capacity through it than its original design. And obviously, that's also what ORL are relying on here in the U.K., where we're going to expand the capacities of all the traditional OSP sheds that we built for them over the last few years here in the U.K. to allow them to do significant growth over the next 2 to 3 years without bringing on stream a new CFC. We've been working hard in the background around increasing the breadth and flexibility of our solution. Our products have developed massively since we first started licensing them internationally in 2017. This not just reflects the wide range of partners that we have today, but also the wide range of markets that we operate in and also reflect our ability to meet our existing partners and potential future partners wherever they are along their e-commerce journey at any level of maturity and in a wide range of scenarios. So if we look today, we're able to deploy a fulfillment network with Ocado ranging from, on the left-hand side, manual pick in stores. We have over 1,000 stores live with manual pick in them. We've got great software in there. We run the same software in dark stores. We can move into manual warehouses. We also today can deliver a side of store product, which is a hybrid of manual and automation, supplementing tens of thousands of SKUs that can be stored in the automation with anything extended at the hot chickens and the sushi from the store and delivering that straight out to customers. As well as small, automated warehouses from only kind of 350 square meters up to 50,000 square meters, we can deliver them all. We want to deliver this to enable the very large and the very small and everything in between. There's still a kind of widely held myth that the market is a zero-sum game between these different types of automation. That's not the case. A lot of people say you should use store fulfillment for everything. You should use micros for everything. You should use large, automated warehouses for everything. We have a strong view that there are different solutions for different use cases at different times in a retailer's journey. And we try to try and illustrate this in this slide here. Manual pick in stores are good for low densities. They do suffer from high labor intensity relative to other solutions. You can obviously pick the range of SKUs in the store. And they're good at low volumes. They're good starters if you've got a store network to start with a manual solution, avoid any incremental CapEx, avoid the operating cost of large warehouses if you haven't got big volumes to put through them. That's obviously how we started with Bon Preu. You can then if you get higher volumes and you're starting to interfere with the store-based traffic, you can move that into dark stores, do a bit more volume through them. They're good during the growth journey. The side of store, which is a new product that we're now marketing to our partners and non-partners worldwide are really very interesting, in particular, if we go to the bottom line, the best for pickup and point-to-point delivery. So if you want to do pickup and point-to-point, it can be more effective to do that locally in those individual sites to do with some of the work that we've done on the automation, we can now build in as small as 350 square meters, have more than 10,000 range, up to 20,000 range at about 450 or 500 square meters and deliver those services with great efficiency. And they work best as a network where clients have large warehouses that can operate as a dedicated RDC into those small side of stores. But they can work in an alternative environment as well. They need another 50-odd square meters in that instance, but they can be extremely efficient for pickup and point-to-point. And then as we get to fully remote and automated, you can have the small micro-CFCs doing a similar job to side of store, but environments where our clients don't have stores to do again, the pickup and the point-to-point, in particular, the point-to-point deliveries, GBP 5 million to GBP 15 million of kind of sales capacity. Again, small sites, 400, 500 square meters, ranges of 10,000 to 15,000 SKUs, massively more efficient than single picking immediacy orders in a supermarket. There's a more than 50% fall in productivity when people rush to do a single order to be able to dispatch it within minutes to a courier than when they can aggregate orders together for planned delivery. And then for planned deliveries, same day and next day, and obviously, same day is something that we've been focusing on and growing dramatically with some of our clients, and we'll continue rolling out through the network. We've got some into the high 20s now at some of the sites in terms of high 20s percent of deliveries being same day, expect that to grow by year-end to over 1/3 and then to continue going from there. They are still, by far, the most efficient method for mid- to high sales volumes in mid- to high dense areas where clients are doing GBP 75 million of sales from a single site or have the capability of doing GBP 75 million up to well over GBP 1 billion, if that's the appropriate size. Erith, of course, being well over GBP 1 billion in capacity here in London. And the likes of Bon Preu starting their warehouse, they will migrate in that kind of volume of sales about -- or a bit more than that, maybe just over GBP 100 million. But we've rather got sites now that we can turn live with about GBP 75 million of capacity, and that's all the clients need to be paying for on day 1. So from planned deliveries for pickup, for point-to-point for lower volume, for more density, we can offer clients the whole solution on OSP, integrated, upgradable, and this is all a very important point. What are we using in them? So our technology is kind of used across them. So we have our ISF manual pick software in our store pick. Obviously, everybody is using the front end -- leveraging the front-end technologies, but in particular, the differences between them. In the manual stores, we're also doing supply chain as well as ISF software. In the side of stores, you're doing the manual pick for the tail of the ranges for maybe the freezer, for the sushis and the hot chickens, you're using supply chain software. You are implementing OGRP, the On-Grid Robotic Pick even in those small sites, meaning that you can run a site with one person operational inside it. That's all it needs to actually operate and do millions of pounds of sales at any one point in time, one person manually picking, supplementing what the OGRP are doing, 600 series bots and a new dispatch port to enable rapid and inexpensive dispatch to couriers and to pickup customers. We've got automated micros that leveraging all the same points as the side of store, but obviously without the manual pick software. And then we've got the giant warehouses where we've also got the auto frame loading, auto bagging and auto freezers. So kind of leveraging what we've developed for the large warehouses across a suite of solutions to make sure that we can give every grocery client in the world the solution that they need for their market at the appropriate time given the way that those different markets have evolved differently, different customer kind of habits, et cetera. So just going through a few of the clients, 4 good examples. We -- at Bon Preu, I mentioned it earlier, we think it's a great example of a client joined us just over GBP 1 billion of sales as a retailer, started their online journey with us on OSP. First client using OSP internationally, grew through 2 dark stores, will upgrade now to a fully automated warehouse that will turn on with probably over GBP 100 million of sales into the warehouse the day it goes live. Very smart business, family-owned, family run, very careful, very astute. And so we're very excited to carry on that journey. We think it's a fantastic example and very positive. Coles, great example recently of transferring quite large volumes of existing business in Victoria, New South Wales into warehouses with more efficient fulfillment. They've generated substantial benefits already. Coles have already themselves reported better product availability, freshness and range for orders fulfilled through the CFCs. They've also reported more availability of delivery slots to better meet unserved demand. They've reported a big uplift in their customer NPS scores for orders fulfilled via the CFCs versus other fulfillment channels. The perfect order rate continues to track at more than double the national home delivery rate. So some really nice comments there, including one from the CEO, Leah at the bottom. Just -- and they've got positive results. And obviously, I can't give their results, that's for them to do, but they are seeing significant uplifts from moving into these warehouses from store-based fulfillment. Newest client to go live is Panda. Panda is going live in a similar fashion as Bon Preu did several years ago, moving into a market where online is growing fast, but where the labor market dynamics and the current scale don't require automation yet. And so we are deploying in-store fulfillment across their substantial network as well as into dark stores for them. And then finally, let's look at our most attractive use case at the moment, Ocado Retail. Key goals for Ocado Retail, obviously, aren't new to anyone in this room. Business wants to continue to scale. Business wants to grow quickly. We are helping them by using the established network of CFCs across the market, driving more volume from those existing CFCs. We obviously also have 2 micro CFCs. That's obviously a growth possibility for future with Ocado as well as more CFCs when they do finally fill the existing ones, but with very strong 16-plus percent growth in the first half. And obviously, also powered by the end-to-end solution with all the customers having now transferred on to OSP, all the end shoppers having transferred on to OSP. And they were pleased to be recently named as the Online Retailer of the Year by the Grocer last week. So summary of where we are right now is, hopefully, we've given you a good insight not only into the numbers, but how we work with our partners to deliver their online businesses with the right tools at the right time. We've had a strong half. We reached some exciting milestones, progress in our whole global network. Weekly growth in volumes across the OSP network of 23% year-on-year across the CFCs. So even where they're not yet drawing down modules, they are getting fuller and fuller, getting towards the point where they will draw down modules. Secondly, continuing to work with our partners to help them to best utilize the Ocado platform as well as drive growth and success in their businesses. We've got more people on the ground with more of our clients. We've been having some very quite material impacts in some of their sites, which I think some of our partners have noted improvements in their own financials as a result. Finally, as we've spoken about, as we look forward to a future partner base, we've got a number of exclusivities rolling off, and we expect to -- I think we used the comment in 2017 of do multiple deals with -- in multiple markets over the medium term. And I think we're probably back to a statement similar to that. So we're in a great position to move forward with a more flexible proposition with a proven track record and execution across multiple markets worldwide. And on that note, we'll move on to the Q&A.
Timothy Steiner: If we can go one at a time, Tintin, because I always forget the second one here.
Maria Christina Stormont: Okay. The first one is, can you give more color on the relationship with Kroger, particularly from the lens of their Q1 results, new head of e-commerce, focus on e-commerce profitability. Are you at that table with them? How engaged are they in terms of discussions on e-commerce profitability with clearly one of their key partners?
Timothy Steiner: So Adam and I landed about midday yesterday back from Cincinnati. We were in their office from, I think, about 8:30 till about 6 in the evening with Yael all day and with Ron for part of the day. It was the first time I met Ron in person. So we're very engaged with them. We've got a very strong working relationship with them. We've got at least a couple of dozen, if not more people on the ground with them, particular focus in 2 of the warehouses in Detroit, which is the one we've spoken about growing beyond its original design in Monroe as well, which is obviously the biggest, busiest and closest to their epicenter as a business. Exploring current opportunities, future opportunities, their objectives. Obviously, Ron got a new CEO -- new interim CEO, new CFO, Yael being promoted to this new role. I can't tell you what I think their strategy is because that's for them to report on. I do believe, though, that they are focused on e-com and on e-com growth and on the role that we can play in that. And we're working very hard and spending time with them, and there's a lot of follow-up still to go on from those sessions. So we've got a good relationship, a lot of opportunity in the U.S. for sure.
Maria Christina Stormont: Great. And then the second one is on the exclusivity and the roll-off in the second half. Is there anything you could talk through to us about in terms of our expectations of maybe which countries and that sort of thing? And in terms of go-to-market and sales and marketing to put muscle behind that, how should we think about costs?
Timothy Steiner: Sure. It is the one area in our SG&A that is a growing area is sales for us, but the numbers are very small relative to the size of our total headcount. So we are expanding and we are talking to more people and planning to talk to more people around the world more frequently than we have in the past. So we're kind of gearing up back into kind of full sales mode, but it's an immaterial amount of money in the scheme of the scale of the business. I have tried unsuccessfully a number of things. But one of the things I've tried on successfully for the last 5 or 6 years is to talk about exclusivity. And I always say conditional exclusivity. It was conditional and time-bounded exclusivities that we granted our clients that we're only going to extend into perpetuity than we thought they were. If those clients had an unbelievable market share we hadn't seen anywhere in the world like nobody has in the U.K., not Ocado Retail, not Tesco, nobody has. And that they put 100% of that through our platform. Otherwise, they were all inevitably going to come to a time banded end. It is now 5 years since the first international sites started rolling out. A number of those clients started to roll them out in 2020, 2021, 2022. And as we went on, we made the conditions harsher and the time bands shorter. So it all kind of accumulates to around this time that we'd expect to be able to be free to operate in a number of markets. We're not going to be absolutely specific about individual countries because that's specific about individual clients, and we've got confidentiality agreements with them. But generically, we're moving from an era where we had a large number of the markets that we had a client in, and that was it for us, and we were looking at trying to expand into other kind of Western European and a few other markets, but we were largely covered to a new era where we will be a multi-client potential provider of services. I don't think I can get any more detail than that. I know I would love to, but that's about as far as we're going to go.
Marcus Diebel: Marcus Diebel, JPMorgan. Two questions. It seems I can ask one for Tim, one for Stephen. Maybe, Stephen, we start with the financial question. It's great that you obviously will handle the next bonds out of the cash balance. I think it's a very strong message. But how do you think you sort of play this? Is it -- you said previously that you don't want debt to turn current. Is that still the case? So shall we expect that you buy the closer maturities in the market? Is that the view? Or do we just wait until they become new? That's the question. And then for Tim, I think more generally, thanks for the update on the journey that obviously your customers take. What is not clear to me looking at the slides, is it that most of the clients need to go through the whole journey of micro fulfillment first, then when this works, we go -- we can be a bit more brave and we go to the next level. But is that really the journey that most clients will take? Or is there sort of like leapfrog to 2 big CFCs as well? Is that a possibility?
Timothy Steiner: Can I go first, Stephen?
Stephen Wayne Daintith: Yes, please.
Timothy Steiner: It's a great question. Look, I think it depends who that retailer is. So what I think -- if the retailer has a multibillion-euro dollar pound store-based scheduled delivery business today, then they should migrate straight into one or more depending on the geography and the volume shed. So if you look at a retailer who's already doing ORL type volumes, they can migrate -- see a significant pickup in their economics, in their customer proposition, in the execution of that proposition and which will drive customer growth, et cetera. So Coles is a good example of that. They had a -- they're not at the scale of Ocado Retail, but they had a multi-hundred million kind of pound equivalent business in New South Wales, in Victoria, you migrate it into the warehouses, you see a pickup of all those customer base stats that drives a growth in volume and a lot of positive things, right? So no, if you've got an existing business, migrate straight into these large warehouses. If you were in one of the markets in the world where it's 60%, 70% store pickup, then you probably don't want to migrate into giant centralized warehouses. You need to migrate into something that's a different size that maybe does somewhere between GBP 25 million and GBP 50 million in a single site type of thing, depending on which market it is or something that's doing GBP 5 million to GBP 15 million. You can look at different markets around the world. Our kit can be very flexibly deployed. But if you're a small retailer and you're doing a couple of billion pounds, euros, dollars or whatever it is in bricks and mortar, you want to start in e-com, I would recommend today starting with store pick and evolving from that. And everything in between. So no, not everybody we're going to come to is going to be Panda-sized or Bon Preu-sized as of 8 years ago and need to go through that journey. There are many retailers out there who will have multibillion businesses who could improve their economics. Their PBT, their NPS scores, their fulfillment, their range, they could just transform their business overnight by migrating into half a dozen, a dozen, whatever it might be in terms of their volume, large sheds. And there'll be some where they should do a bit of everything. They might be doing a big scheduled delivery business. They might also have a big instant delivery business, and you could see somebody taking big warehouses and micros, but in different geographies, still using store pick. As I say, it's -- we don't need to ram one of these solutions down and give you every reason why it's the best thing, whatever it is you're doing and then it proves not to be. We need to sit down with these potential clients and say, where are you today? Where would you like to be? Actually, this is the art of the possible, and this is the journey that we should go on together to get there.
Marcus Diebel: Maybe just related to this, I mean, the larger grocers, do they think exactly like this? Because I mean, it makes a lot of sense to say the bigger players should just go to the biggest CFCs. But what we see from the outside perspective is that even the bigger players play with micro fulfillment for now?
Timothy Steiner: It all depends on which market you're in and what options you've gotten. The economics of a large, automated warehouse, we have transformed them. Not only have we transformed them in our history, if you mean. But in the last 18 months or 24 months, we have totally transformed those. Because if you can build a site with the same volume on half the footprint, you've got approximately half the fit-out cost. You've got half the rent rate services and utilities costs. And so your breakeven point is significantly lower in terms of your total capacity. If at the same time, as we have done, you lift the productivity by 50%, then your contribution per order is higher, which needs to cover a lower fixed cost. So a business that might have looked at big warehouses and said the improvement in customer service and the potential improvement in economics is not worth the risk of me having this big asset. That conversation is different today than it was 2 years ago because what we've managed to do with the technology to effectively drive it through much tighter site sizes. So the -- there's a lot of conversations going on. So I can't tell you how they all think, but we'll see how we manage to progress with this as those kind of exclusivities change and as we build up our sales capacities again and talk to more people and go out and do more deals.
Stephen Wayne Daintith: Okay, debt maturities. We've got GBP 450 million of debt maturities over the next 2.5 years or so. I am not going to go into the specifics of our plan, but you've alluded to sort of 2 extremes, either go into the market today and start buying back or wait to the very end. Our general strategy remains not to allow debt to go current. I think the one thing that might cause you to think about that one is our liquidity today, strong liquidity that we have and improving cash flow profile. So that's our core strategy and goal, but let's just say we might choose to flex that if we thought it was appropriate to do so. We have got 2 or 3 options in front of us. We've got a good plan. You'll hear about it when it happens.
Giles Thorne: It's Giles Thorne from Jefferies. It was -- 2 questions for Tim, please. First of all, it's been almost to the day a couple of years since you introduced the new layer of management within Technology Solutions with the regional presidents. It'd be useful to get a sense of has that initiative achieved what you wanted? Any color you can add there? And I will let you answer that first.
Timothy Steiner: Thank you, Giles. It's been great getting more resource, not just the presidents, but their teams on the ground in the regions. And it's really about 2 things. One, it's about better serving our clients by having people permanently in their offices with them, understanding their challenges and opportunities better than we do, and we just kind of fly in with a team of experts, spend a few days and fly back out again. So on the one hand, that is a big positive. And then the other hand, from the -- looking at it from some of our own senior team who used to try and deal with this coverage, including myself, by flying all over the world constantly, as we got bigger and with more clients, it's just not possible to do as many trips as your clients want. And so having more senior representation in those regions to do half of those sessions to make the amount of travel that myself and at the moment, myself and James need to do is also a positive. But the main thing is about not just the presidents themselves, it's about getting the partner success resource in the regions that can then draw on our organization on our global excellence teams to kind of come in and help those clients with whatever it might be from warehouse operations to our recommendations in marketing or pricing or whatever it might be. And so yes, it's had an impact. You can see that our clients are growing. We would obviously love them to be growing faster, obviously, but we are helping them, and they are achieving better growth and better productivity as a result of those efforts.
Giles Thorne: And a follow-up on that. Is it serendipity that the presidents are in place as exclusivity rolls off? Or was that always part of the plan?
Timothy Steiner: I think that it's serendipity. I would take credit for the plan, but it's -- I think it's serendipity. And look, it's just a natural evolution of where we've got to. And the fortunate thing is how much the product has evolved at the same time to just better serve more use cases. And yes, let's see.
Giles Thorne: Okay. And second question is on a similar vein. How material to your commercial momentum is the recent failure of Attabotics, if at all?
Timothy Steiner: Let's wait and see. I mean it's one less potential competitor unless somebody -- and I have no idea, to be honest, if someone is going to buy it and revive it or something, I don't know. We've not come up against them very often to my knowledge in OIA. We've not come up against them very often in grocery. We'll wait and see whether it creates an opportunity.
Sreedhar Mahamkali: Sreedhar Mahamkali from UBS. Just to build on, I think, a couple of answers you gave there, Tim. Maybe if you just go back to the full year results presentation, you put the CFCs into 3 buckets. I think working well needs some work or completely different strategic approach. Can you build on that where we are? Have you seen CFCs or operations moving higher up into working well?
Timothy Steiner: Yes. Look, most of the CFCs have -- almost all of the CFCs have seen good growth, as you can see from the average growth numbers. So if you had put a set criteria of this is what you have to be to be in this one, this is what you have to be to be in this one, this is what you have to be to be in that one, you're obviously not going to see an improvement overall because people are growing, okay? We're still very focused on helping them all grow. And I think that was a good way of framing kind of the state of some of them. We haven't suddenly taken the ones at the bottom to the top kind of thing because we'd be up here with our blowing the trumpets if we had done. But we are working hard with our clients on improving the -- their outcomes in all of the warehouses and the growth is materializing. And I think our clients are growing strongly. That kind of volume growth that we're showing is obviously strong relative to the market.
Sreedhar Mahamkali: Got it. Maybe just on the exclusivity again, you clearly are sounding very positive that the exclusivity is rolling off. Why is that? Is it on the basis of potential conversations already sort of lined up, that gives you visibility and confidence that this is actually a good thing?
Timothy Steiner: We definitely see it as a good thing, and it was the design. We were not designed to just sell to somebody and irrespective of the growth that we and they achieve together. We -- that's it for those markets. We kind of locked ourselves out. We -- in some markets, we know players. In some places, we're having conversations. I don't want to be too specific. I've fallen for that trick before and had expectations of things that didn't -- was supposed to arrive and then didn't arrive. And then 2 years later, they did arrive. But in the meanwhile, that caused us all kinds of angst. So we don't want to be specific, but we are very busy. Our teams that are focused on talking to other retailers are very busy, but I expect the level of activity to increase over the next 12 months significantly.
Oliver Tipping: Oliver Tipping from Peel Hunt. I just had a quick question on your sort of pipeline. I just want to know what the weighting was between your sort of different product sets in terms of size and what the lead time is for each of them? Because I imagine CFCs, you obviously have a few years you're aware of, but sort of an in-store thing, I imagine it's much shorter lead time. And then my second question is just your sort of groceries versus non-groceries in the future down the line. How do you sort of see that going in terms of proportion of the business?
Timothy Steiner: They're great questions and quite difficult to summarize. So if you're bringing a new client on who's doing just store pick, if they are in Saudi Arabia, where you read -- people read from right to left, not from left to right, as well as people use payment methodologies that you don't have in any other country. You can't turn them on overnight because you've got to make changes to your system to enable those kind of things to happen. If you were doing that in a market that you were already in where you had -- you were already working with the established payment providers that the new client wanted to work with as well in a currency and a language and a tax regime and a legal regime that you're already familiar with, then you're kind of constrained by their ability to build the interfaces from their range management systems. And their planograms in store, for example, to your systems, but you could be live in months, whereas in -- or even weeks, if you so -- I mean, whereas if you go to a new market where you've got to deal with regulatory currency, language, payments, it can still take a year even if you're store picking. In terms of building warehouses, we only need a matter of months, subject to us having the kit on hand, which as we -- if we get successful and start to build up the level of warehouses being built, we'll have more kit on hand just so we can do it faster. The biggest time lag normally is the clients finding the sites, securing the sites and getting to the base build done until we can go in. As we're miniaturizing what we're doing, it is easier for clients to be able to go into existing buildings that can speed up the process. But it is very variable in terms of different countries, different sized buildings, new and existing buildings, existing clients, not existing clients, existing markets, not existing markets and their variation. It's a bit of a minefield. I mean I can't give a straight answer. But hopefully, I've given you a flavor for some of the considerations of how long it takes to get somebody live. You had a second part to that?
Oliver Tipping: It was just sort of groceries versus non-groceries in the medium-term?
Timothy Steiner: Groceries versus non-groceries. Look, we've got a lot of experience in grocery. So OSP, we still think is going to be the mainstay of the business for quite a period of time. There is obviously a lot of opportunity outside of single-pick grocery. Some part of the OIA opportunity may be in grocery, but just not in single-pick grocery. So in-store fulfillment where grocers globally have been spending billions of pounds every year, driving automation to do store-based fulfillment as well as the key markets, I think, at the moment are grocery, pharmaceutical and clothing. Those are the 3 main markets that we're seeing a lot of activity in.
Sarah Roberts: Sarah Roberts from Barclays. So firstly, just a follow-on from Marcus' question earlier. It seems if today, Tech Solutions has a whole wider breadth of solutions versus maybe 7 or 8 years ago. Just curious, if we take a long-term view, what is the strategy for Ocado Tech Solutions? Is it still the main focus hoping to get everyone to that kind of CFC solution, which has been your bread and butter today? Or if there's a scenario where maybe some of the more hybrid solutions become much more high growth, could there be a pivot in kind of strategy over the long term? And just as a quick follow-up, how do you monetize the hybrid solutions? Is it the recurring fee revenue model still?
Timothy Steiner: So we haven't got much of it done yet, so I can't quite tell you. But yes, it's likely to be a recurring fee, but with less net CapEx outlay from ourselves. The -- I think where would we like to see it all evolve is actually to see a lot of all of these solutions deployed. So in low labor cost markets, it's going to be a while before automation is the right answer at the level of automation that we deploy. So they kind of using software to gain as much efficiency and control and drive the best shopper outcome, but doing it more manually is going to be the solution until the labor starts inflating to higher levels. The giant warehouses will always cost something to put in the ground and the buildings that house them will always cost something. That means that if it's a number of years away before anyone is going to get 25% utilization or 35% utilization of them, they won't be the right solution. At the same time, we see online grocery taking an ever-larger share of the global grocery market. And so what we're hopeful to do is to deploy all of it. And I think the key is that we leverage -- we actually do leverage in the manual freezers, for example, in the warehouses use the same software stack as the in-store fulfillment users. So we leverage what we have across these multiple use cases, the same robots, the same picking arms, the same vision systems, the same -- lots of common pieces of IP that are applicable and then actually creating the network effect where a client does have multiple of these assets deployed is the ideal scenario. And the smaller ones work better with bigger ranges, lower waste and need less space if they are connected to and have access to a large warehouse with On-Grid Robotic Pick to do their fulfillment of multi-SKU bins into them. So we'd like to see a bit of everything.
Sarah Roberts: Got it. And then I suppose one for Stephen on the cash side. You're making a lot of progress on the cash burn. Just wanted to understand in '26 and '27, if expectations came in a little bit lower than people were modeling. What levers do you have on the cash side to kind of hit those cash flow targets that you set out? And I suppose as a follow-on, how low could CapEx feasibly go within the business for you to kind of hit those targets?
Stephen Wayne Daintith: Yes. Two good questions there. So first of all, what opportunities? I think looking at our fixed cost base, that GBP 420 million across technology spend and support costs. I think first of all, there remains discretion within the technology spend. We're making lots of smart choices around very specific items of technology that are either might be general to all of our partners or specific to certain partners. Tim alluded to some of those in the Saudi Arabia example. I think there is -- there's clearly an opportunity there and then the support costs as well. I mean I've guided to sort of the reduction that we're sort of thinking around in sort of 2, 3 years' time for each of those -- each of that spend. You are looking for a sizable reduction in the aggregate of that GBP 420 million. I won't go into specific numbers as that's one of the key levers that we have in delivering cash flow positive. As a reminder, the core building blocks are the module count, 150 live modules at the end of '27. That with our direct operating costs continue to improve, will generate a GBP 500 million cash flow contribution. The important number, GBP 500 million cash flow contribution. And then within that, you're managing your fixed costs that I've just alluded to and CFC CapEx. CFC CapEx is going to be somewhere, I would say, in that year [indiscernible]. It's very difficult to be precise around this, of course, because if we get new contract wins and new CFC wins, that will be a very good thing. It might lead to elevated levels of CapEx, and we can then think about that as we approach that. But this CapEx is going to be in there around GBP 100 million to GBP 200 million and then the support costs and the tech cost becomes the balancing figure to get you to cash flow positive. That's the way we're thinking about it.
Maria Christina Stormont: In terms of building a new CFC now, for sort of kind of like-for-like capacity? How much would it cost now?
Timothy Steiner: So Tintin, it slightly depends on where it is, is it in a seismic region? Is it multistory, et cetera, right? But our net exposure is in the kind of GBP 6.5 million to GBP 8 million per module going live, right? That's kind of in a normal, in a non-seismic type scenario, nothing unusual about it. That would be the kind of live exposure. So it doesn't matter whether we're building a 3 going live with 1 or 6 going live with 2. Our net exposure in cash terms is about that kind of number.
Maria Christina Stormont: Okay. And then just secondly, sorry. You talked about shopper orders from third-party marketplaces now being fulfilled by -- on OSP. Could you just elaborate on that? It was like a quick bullet in terms of the opportunity, et cetera.
Timothy Steiner: Sure. Look, we've created the first of, I'm sure, what will be many APIs to allow our clients if they are working with aggregators, and I'm not supposed to get specific, but there are a variety of aggregators that are taking in grocery orders that would sometimes go to that client's store to fulfill them, for example. There are 2 things that can happen now. They can absorb that order and fulfill it either in- store, but using the same gun and the same process as they were already doing for their orders that they put off their own front end and order kind of getting orders from their own shoppers from their own front end. They can aggregate that with the aggregators order and process it singly and they can also send it into the warehouse if they've got a warehouse to do the same thing. So over time, I would expect a lot of retailers are working with a lot of aggregators making their products available on those. It's a way of making sure that they can fulfill those in the -- both the cheapest, but also from a process perspective. It's got very complicated in some stores. We've got people running around 4 or 5 different guns because an order has appeared from whoever it is in the U.K., it would have been from Jet, from Uber Eats, from Deliveroo, from Amazon. There are retailers out there that've got 4 people running around their store on top of the orders that they're taking themselves. And so it's aggregating that into a simpler process and allowing it to go through the warehouse is something that is live and something that will go live later this year with one of our clients is from their own front end, the ability to run an immediacy service from a single app, from a single web, leveraging the same, obviously, fulfillment processes, but with different -- at their discretion, different range, pricing and promos if you've chosen to do the kind of sub-1 hour order versus the planned delivery. So that's also coming this year on the kind of front-end capabilities. All things to all people in the market. We need to see where the market is going and just make sure that our platform supports every use case that we can envisage.
Marcus Diebel: Yes. Maybe a follow-up for Stephen on retail. Clearly, very impressive top line growth, very impressive customer acquisition. You're clearly in growth mode, when I look at the margin. At the same time, the margin, 3.3%, is that sort of like the right margin for a 92% utilization? Or how shall we think about it? Because I don't really see it in the marketing line. I mean it's not that you have the usual massive marketing, hence, top line growth, there are other drivers.
Timothy Steiner: They're in the middle of a couple of big transformations. So one was migrating the customers over to OSP. So they've been running dual running a lot of processes as they've been through that over 1-year journey to do that, 23 years into their launch doing the first major migration. They are simultaneously migrating off of some old legacy systems that are -- that were included in what we call the ocean estate. They were things that we had written for them, but they're not part of OSP. And so they're migrating things like their people systems, their finance systems, their range management systems, their call center and customer contact systems. And so they've got quite a lot of elevated costs that Stephen referred to earlier. And so, normally, you would want to see at this level of utilization, a higher EBITDA and PBT numbers. We would expect to see that in the future. And also, whilst they are at 92% of the stated capacity, they are not at 92% of the potential capacity of those sites. So we would expect to see significant growth and probably in the next -- up to 3 years' worth of strong growth to come out of the drawdown of Erith and the remaining capacity in the other sites is a strong expectation.
Stephen Wayne Daintith: Just one thing I'd add to that as well is gross margin. Ocado Retail is investing in price at the moment to win those customers and all the numbers. They may, of course, choose to sort of be more relaxed about that gross margin and follow price inflation generally in the market.
Timothy Steiner: Thank you very much. Thank you for coming out, everybody.